CPI inflation expected to trend higher in December: SBI Ecowrap

The country's consumer price index-based inflation for December is expected to remain at an elevated level and range between 5 and 5.2 per cent, a State Bank of India (SBI) report said on Wednesday.

"CPI inflation came in at 4.88 per cent in November 2017, surpassing the already high expectations of the market. And for December 2017 as well the numbers are expected to remain elevated. We project CPI inflation to come in between 5-5.2 per cent," the SBI Ecowrap report said.

The report comes just days before the Central Statistics Office (CSO) is expected to release the CPI data for December.

However, the report disclosed that the higher rate of inflation is "primarily due to base effect.

"The average for Q3 FY18 will come around 4.5 per cent on yearly basis compared to 3% in Q2 FY18. We expect the Q4 FY18 average at 4.8 per cent," the report said.

"Inflation for the Jan'18-Jun'18 period is likely to be on the higher side owing primarily to base effect (average inflation for Jan'17-Jun'17: 2.89 per cent). Interestingly, some inflation numbers in the first half of 2018 could print over 5.5 per cent and this could be a source of negative surprise."

The report added that it expects that on a net basis CPI inflation will remain modest in FY19 at 4.5 per cent.

--IANS

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